Ah, the age old question in real estate. Should I buy or should I rent? Well, if you ask any standard Realtor they will tell you BUY! But, if you haven’t figured it out yet I’m not your standard Realtor. I try not to drink the Kool-Aid and instead give you unbiased and practical advice. So in this quick blog I’d like to ask you some questions to help YOU figure out if you should Buy or Rent in Chicago.
Do you know where you want to live for the next 2 to 3 years?
This may sound like an obvious question, but it is a question most people don’t ask themselves. They may want to buy for the purpose of buying, but may focus more on what they can afford versus where they truly want to live in the next 2 to 3 years. So the question I ask you is, where do you want to be? Can you see yourself living there for the next 2 to 3 years? If so, then you’re at least one step closer to buying.
Can you afford home ownership?
Some sales people may say “You can’t afford NOT to buy!” Umm…yeah, whatever…that’s not the right answer. What I mean by, “Can you afford home ownership” is after purchasing the home will you at least have some sort of a financial cushion in the event there are any issues with your home. This can be small things like needing to replace an appliances to larger items such as roof repair on a single family home or a special assessment in a condo building. As long as you have some sort of cash cushion then you’re again one step closer to buying.
Is your family situation stable?
OK, this sounds like an odd question so let me explain what this means. Are you in the process of getting married and thinking of having kids in the next year? If so, then you might want to be looking to buy a place larger than a studio! Sounds like a silly question but you’d be amazed at how some people jump into things. Take your time to consider this. Let me give you good example of clients of mine who did the right thing.
I had a couple contact me off my blog about 4 years ago. They were an absolute delight to work with. We got along extremely well. They were looking at 2 Bedroom condos in River North / Streeterville for up to 375k. However, as we were looking over a month or so, they also started thinking more. They decided to put the search on hold for a bit to decide what they wanted and needed for themselves. A year later we were back on with our search and this time they were married and planning to have a child. Their search criteria now changed to a 3 Bedroom with lots of living space in the areas of Lincoln Park and Lakeview and now they upped their budget. They simply took some time to think about their situation and then they made a wonderful purchase where they will definitely be happy for at least 5 years.
What are you willing to do with your property in the future?
I’ve had some clients who have purchased a property knowing that in the next year they’ll likely move out of town. They still wanted to buy because they planned to rent out the property if they moved and planned to keep it as an investment. If you think you might be moving soon then buying might not be for you, or it might be if you have different goals for the property you are buying. However, if you are thinking of buying and renting out your property then you need to make sure you plan accordingly and purchase accordingly.
What tax laws will benefit me?
The interest deduction is a major factor for many buying today. The ability to write off interest (please consult your tax advisor as everyone’s situation is different!) on your home mortgage is a motivating factor for many. How much will you actually save if you buy? For many this could help make or break the decision in whether or not you should buy.
What is going to make you happy?
Making money on your home is a wonderful thing but focus on where you will be happy living. Look for the maximum value, but remember your happiness is a big part of that value consideration. Would you rather live in a property where you make only 1 to 2% appreciation a year and be extremely happy or would you rather live somewhere that is not your ideal location, but instead have a great chance of return down the road. Everyone is different, but only you can answer that question for yourself.
In some instances people can only be happy if they can remodel their kitchen and make their home exactly how they want it, which is something you cannot do if you rent. So again, if this is you, you’re one step closer to buying.
It is only a decision you can make
It is not a decision your Realtor can make for you, or your friends, or your mother. It is only a decision you can make for yourself. Take all of the above into consideration and make an informed decision.
Paul Blackburn is a licensed Real Estate Broker and Realtor with @properties in Chicago. Paul has been selling real estate since 2007 and is a broker and trainer for the Skowron Group which has sold in excess of $100 million in 2016 alone. For further information or questions please feel free to contact Paul directly at Paul@pkblackburn.com